International Construction Law Review
BALANCING SOVEREIGNTY AND THE CONTRACTOR’S RIGHTS IN INTERNATIONAL CONSTRUCTION ARBITRATIONS INVOLVING STATE ENTITIES
PHILIP DUNHAM*
Partner, Dechert LLP, Paris
SIMON GREENBERG*
Associate, Dechert LLP, Paris
INTRODUCTION
Disputes arising from domestic construction contracts raise issues that are often more specialised and complex than ordinary contractual disputes. Add an international element and delicate issues of conflict of laws, neutrality and enforcement of outcomes arise. Add a sovereign foreign state as a party and matters are further complicated by the public law of the state concerned and the protections offered by principles of public international law. But international construction contracts with state parties are increasingly common, particularly for projects involving infrastructure, power, mass transportation and mineral exploration. Contractors pursuing international projects with state entities need to give extra-special attention at the drafting stage to the dispute resolution mechanism and particularly the issue of enforcement, as well as the commercial and technical terms.
This paper focuses on jurisdictional and related objections raised by foreign state entities in international construction arbitrations and highlights precautions that contractors should take at the drafting stage. This paper is limited to private international commercial arbitration and does not deal with arbitrations under investment treaties such as free trade agreements, bilateral investment treaties and the ICSID Convention. A handful of some of the most important issues facing foreign contractors is covered. In part 1, issues of compliance with local laws regulating the capacity of states and state entities to enter into arbitration agreements are discussed. Part 2 concerns who will ultimately be responsible for the contract on the state’s side. Problems can arise in a number of situations
* Philip.Dunham@Dechert.com, Simon.Greenberg@Dechert.com. Thanks are due to José Caicedo for his assistance in preparing this article.
Pt 2]
Sovereignty and Contractor’s Rights in Arbitrations
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